Corruption

Prohibition of alcohol has proved to be a failed experiment a hundred years ago in the US. The biggest case against prohibition is the 13-year ban enforced in the US. You must keep in mind that pre-prohibition crime rates in the US

Definitely, the Government imagines that handholding a nation of 1.252 billion will teach our multitudes the discretionary wisdom to judge right from wrong. Strangely, when looked at in entirety, one wonders if it is the Government that needs handholding to help it understand the cockamamie ideas,

MGM Resorts International has decided to delay the opening of its new resort in the Cotai district of Macau, due to gloomy market conditions. Gross gambling revenues in Macau fell 34% in 2015, to a five-year low of $28.8 billion from a year ago,

It is often believed that countries that are small are easy to govern. It is also believed that high population impedes economic development. There is one nation that shattered these popular beliefs… Hong Kong!

From being an economic powerhouse of the Middle Ages to a third world country in the 21st century, India has surely come a long way… BACK, that is. And it is not without reason that corruption is regarded as the harbinger of poverty in the country. Sample this: In 2006, a Swiss Banking Association Report said that “India has more black money than the rest of the world combined.” Unofficial reports estimate the total sum to be more that a whopping $1,456 billion in black money in Swiss banks. The question to ask is why Indian money goes to the Swiss and not the other way round.

When Alexander the Great visited the philosopher Diogenes and asked whether he could do anything for him, Diogenes is said to have replied: ‘Yes, stand a little less between me and the sun.’ It is what every citizen is entitled to ask of his government.

– Henry Hazlitt (philosopher, economist, journalist)

Sometimes I feel that we Indians have sold our soul to the Devil! Can there be any other reason for our acceptance of corruption as a part of our lives? India is a country where the word ‘politics’ is linked with ‘dirty’, where almost all politicians are associated with mafia gangs and where bribes can make bureaucrats do any kind of work.

I am not trying to stir people’s conscience. All I want to do is understand the root of corruption and how best to uproot it.

Countries topping the list of corruption have a few things in common – government endorsing perfectionist, context minded policies and a number of tariffs and prohibitions. Similarly, the countries that have a low corruption rate have freer economies and less government intrusion as well as regulations. So, I conclude that introducing free market policies in India could be one of the ways of battling the corruption we have taken for granted as a part of our government.

Let me exemplify, the 1920s Prohibition Act forbade trade and consumption of alcohol in the US. Isn’t it funny that the US Government thought it could cure the problem of drinking by introducing a law? This resulted in the emergence of a black market and gave rise to mafia lords like Al Capone.

Now, let’s take a quick look into the Enron-UTI tale. One of the richest companies in the world, the Texas-based Enron Corporation, went bankrupt when its accounting scandal became public. Fraudulence was punished swiftly and lethally by the stock market with firm’s stock diving to zero. When an economy is market-driven, the consumer’s confidence determines success. In an instance where this confidence is shaken, the business comes to an end.

As opposed to this, the government-operated mutual fund agency, the Unit Trust of India (UTI), robbed investors of their money. How did the government react to this incident? It offered fresh funds to the agency and bailed out UTI. Where did these funds come from? Obviously, they came from the taxpayers.

In a free market, entrepreneurs are rewarded for doing well, that is, by offering consumers the products they want, at competitive prices. Irrespective of the size of a company, managers remain answerable to the public. Furthermore, since the market position is not permanent, entrepreneurs and managers cannot take things for granted and are forced to remain on their toes.

However, these market checks do not apply to government or government owned entities. Air India may be riddled with corruption and may lose Rs. 25 crores every day. Does it go bankrupt or cease to operate? It is sold to another company? No. It gets an even bigger subsidy from the government.

What do government approvals, licensing requirements and other regulations mean? Direct corruption. In order to obtain 2G licenses, telecom companies shelled out crores to the minister. End licensing and regulation and corruption goes too.

Be it ministers, industrialists, film stars, cricketers, social activists or corporate executives, everyone seems quite proactive and resourceful in terms of bending the rules and making some quick bucks!

So, the question that comes to my mind is – does corruption run in our genes or are we conditioned to be corrupt socially?

Let’s take the example of our government officials and politicians. The Commonwealth Games, which received international media coverage, could have been used to boost India’s image. Ironically, Kalmadi’s priority seemed to be his own bank balance, as opposed to the country’s image. When Arjun Munda became the Social Welfare Minister in 2000, his first endeavor was to beautify his home in Jamshedpur! Maybe he misunderstood the saying “charity begins at home”!

Clearly, their sense of duty and responsibility extends to their own families or communities. The ongoing trend seems to be that of ‘shared prosperity’ – the benefits of being successful is shared with family members or even distant relatives. In most cases, the success of one individual leads to the creation of opportunities for many.

The overwhelming tendency to serve the biradiri has, since a very long time, become a source of unauthorized social welfare for many Indians. Ashish Nandy, a political psychologist and critic, had rightly said in the ThinkFest, “A poor person brought into power immediately has his family, community waiting to share the benefits of that power.” This adds greater pressure on the person to stay in power. Added to this pressure, is the insecurity of power and money, both of which are unstable and short-lived. Therefore, “he becomes desperate to make money by whatever means possible.”

Not only, are we inclined to bend rules, we are forever looking out for loopholes, or as we would like to call it, jugaad. In fact, we are congratulated by friends and family or hailed as ‘intelligent’ or ‘smart’ when we are able to pull up a source, pay a bribe or even jump a red light. Ironically, for every ‘smart’ move we make, we can quote a shloka from our celebrated epics. After all, Lord Krishna cheated six times, as depicted in The Mahabharata. Furthermore, each time someone pointed out the rule of law to Him, he simply pointed out that the goal was to win.

So, what breads corruption? Shouldn’t making money be linked to success and ability? Shouldn’t the rewards be tied to the creation of value? But give the government too much power and there is bound to be corruption. And this corruption will loot almost half the national income. Isn’t socialism slowly spelling our demise?

Corruption occurs, when a businessman has to approach a government official for a permit, licence, quota, laying taxes or some other regulatory clearance. The only way to eliminate corruption is to eliminate as many activities as is passive, where passive interaction with government is required. End most taxes, government welfare schemes, permits and quotas, and corruption automatically ends. How to do that? Watch out for it in future articles!

I am…

Rakesh Wadhwa. Ever since, I was a school boy, I knew India was on the wrong path. Socialism was just not what we needed to get ahead. Government controlled our travel; government controlled our ability to buy and sell; and government controlled our freedom to move our money. My life has focused on the inherent rights people have. When I was in college, I never understood, what the governments meant by their "socialistic attitude". If people are free to buy, sell and move their capital themselves without any restrictions by state, then the welfare of people is inevitable & hence the countries they live in will become wealthy. The government has no right whatsoever, to point a finger at me or my business. I am not a revolutionary. I just want to light up my cigarette and not get nagged about it. I believe in non-interfering attitude to attain more.

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Bastiat Award

The Bastiat Award is a journalism award, given annually by the International Policy Network, London.
Bastiat Prize entries are judged on intellectual content, the persuasiveness of the language used and the type of publication in which they appear. Rakesh Wadhwa won the 3rd prize (a cash award of $1,000 and a candlestick), in 2006.

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I am…

Rakesh Wadhwa. Ever since, I was a school boy, I knew India was on the wrong path. Socialism was just not what we needed to get ahead. Government controlled our travel; government controlled our ability to buy and sell; and government controlled our freedom to move our money. My life has focused on the inherent rights people have. When I was in college, I never understood, what the governments meant by their "socialistic attitude". If people are free to buy, sell and move their capital themselves without any restrictions by state, then the welfare of people is inevitable & hence the countries they live in will become wealthy.